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The Saga of Research vs Innovation - V

In many cases research generates biz ideas to leverage on its results. This biz ideas are matured through the set up of a start up.

5. Innovation Pills

According to a study of Harvard Business School one of the reasons why Silicon Valley is so successful is the number of start up companies that are acquired by bigger companies. This has a two fold effect: it brings an innovation pill inside the big company and it provides the start up with the implicit knowledge they need to succeed.

As shown in the drawing, Research activities may generate direct biz opportunities that are leveraged through the set up of a start up. This happens both for research carried out by Universities and the one carried out within a Big Company. In many instances we have seen that research created in an academic environment is more likely to generate a start up than the one carried out within a big company (I keep mentioning "big" companies since small ones are seldom involved in research).

There are several reasons for this situation, that may also differ from sector to sector and from Country to Country. In my life in a Big Company (Telco) I have seen that it is way to complex to create a start up, with gazillions of lawyers getting involved and studies on the biz opportunities. Another factor is that in academia a professor may be like to run at the same time the start up and keep his academic job, whilst in a Company it is usually a either or. A third common reason is that a Big Company may potentially exploit internally the result of the research, with no need to create a start up.

Innovative companies have indeed processes in place that allow the "exploration" first and "exploitation" later of research results.

In most cases, we see that Big Companies go on a shopping spree for start up and some are actually growing their innovation capabilities through acquisition. Cisco is a point in case (9 acquisitions in 2013...), Google is another (18 acquisitions in 2013) and Apple another (13 acquisition in 2013).